'Crude prices not to impede growth'

Economic Affairs Secretary Rakesh Mohan today said that India's growth momentum would be maintained despite rising global crude oil prices.

"One thing that has been shown very clearly that we have been able to sustain growth despite shocks," Mohan told reporters on the sidelines of the India-Japan Symposium organised by the Confederation of Indian Industry(CII).

"Growth momentum in the economy is going to be sustained (despite high oil prices)," the official said. While declining to comment on the impact of oil prices on inflation, he said domestic prices of oil products have not been changed so far.

Global crude oil prices, which have trading close to their record high of $55.67 per barrel in October, stood at $54.50 today. Domestic retail prices of oil products have not been changed since November.

India's gross domestic product (GDP) is expected to grow 6.9 per cent during the current financial year. The economy is projected to grow by 7-8 per cent during the next fiscal.

Mohan also said that a Bill to amend Banking Regulation Act and the Reserve Bank of India Act, to enable the central bank to lower the mandatory limits on statutory liquidity ratio and the cash reserve ratio for commercial banks, in the Budget session of Parliament.

At present, commercial banks have to mandatorily set aside 25 per cent of their deposits as SLR and another 3 per cent as CRR. The amendment to the RBI Act will also enable the central bank to lend or borrow securities by way of repo, reverse repo or otherwise.

Speaking at the symposium Mohan said that India intends to continue with its 'Look East' policy to strengthen economic ties with other Asian countries.

"India is a late comer to the Asian party. In 1991, we started the look east policy. The fulcrum of world growth in the next 50 years, or the next century is Asia. Our point of view is, we have to be part of it," he said.

Mohan said, while India will go for WTO plus policies in the bilateral trade deals, the diverse cultural, religious and historical background of the Asian countries needed to be factored in unlike Europe where there was a common cultural system including legal systems.

"We need to work harder in creating trade agreements. There needs to be a lot of work aimed at trade and investment facilitation, harmonising rules, especially in service, common standards and rules of origin. Harmonisation is required but due to different histories it is that much difficult to have common arrangements," Mohan said.